Portal de Periódicos da CAPES

Does ownership always matter?

1991; Elsevier BV; Volume: 9; Issue: 1 Linguagem: Inglês

10.1016/0167-7187(91)90005-6

1873-7986

Saul Estrin, Virginie Pérotin,

Private Equity and Venture Capital

The objective of this paper is to explain and illustrate the complex relationship between ownership arrangements and enterprise performance. It is commonly argued that efficiency will be lower in the public sector than the private because enterprise objectives deviate from maximisation of profits and because monitoring arrangements are inadequate due to the absence of capital market discipline. We argue that public ownership does make the owner-manager relationship more complicated because the chain of principals and agents is expanded; objectives are politically determined; and these are conveyed by a policy-making administrative structure to management. But the relative efficiency of public as against private ownership actually depends on the efficacy of capital market monitoring: on the political and constitutional system; on the information and sanctions available to policy makers; and on the nature of the management market. Variation in these factors can help to explain the different natures and roles of the public sector between countries.